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Question;QuestionMBA 503 Final Examination-40 Questions Contained(1.) The inventory system that uses computer software to keep a running record of inventory on hand is the:A- Hybrid inventory systemB- Periodic inventory systemC- Costs of goods inventory systemD- Perpetual inventory system(2.) When a LIFO liquidation occurs:A- The company must dip into the older layers of inventory cost to compute the cost of goods soldB- And prices are rising, newer, higher, costs are shifted into cost of goods soldC- Net income decreasesD- Income taxes decrease(3.) Given the following data, calculate the dollar amount of ending inventory using the average cost method. Round ending inventory to the nearest dollar.Date Item Unit1/1 Beginning Inventory 40 units @ $12 per unit3/5 Purchase of Property 18 units @ $14 per unit5/30 Purchase of Inventory 24 units @ $18 per unit12/31 Ending Inventory 20 unitsA- $1,419B- $852C- $1,164D- $284(4.) The inventory turnover ratio:A- Will be lower for companies that have many low-priced items in the inventory.B- Shows how many times the company sold its average level of inventory.C- Should be high for a company that sells high-priced inventory items.D- Is determined by dividing costs of goods sold by net sales.(5.) Company B purchased some land and is preparing the land for a new building. Company B should include which of the following in the cost of the land?A- Cost of sprinkler system for the shrubbery.B- Grading and cleaning the land.C- Costs of driveways.D- Cost of fencing.(6.) Which of the following should be included in the costs of equipment?A- Freights costs to deliver the equipment.B- Installation costs for the equipment.C- Testing costs to get the equipment ready for use.D- All of the above.(7.) Costs that do not extend the assets capacity or it?s useful life, but merely maintain the asset or restore it to working order are recorded as:A- AdditionsB- ImprovementsC- ExpensesD- Capital Expenditures(8.) The process of allocating the cost of a plant asset to expense over the period in which the asset is used is called:A- AllocationB- DisclosureC- DepreciationD- Amortization(9.) At the end of an asset?s useful life, the balance in accumulated depreciation will be the same as the:A- Salvage valueB- Cumulative depreciation expenseC- Book valueD- Tax liability(10.) Thomas company trades in a printing press for a newer model. The cost of the old printing press was $61,500, and accumulated depreciation up to the date of the trade-in amounts to $38,000. The company also pays $41,200 cash for the newer printing press. The journal entry to acquire the new printer, press will require a debit to Equipment for:A- $41,200B- $64,700C- $102,700D- $61,500(11.) The future value of 1 will always be:A- Less than 1B- Equal to 1C- Equal to the interest rateD- Greater than 1(12.) Which of the following discount rates will produce the smallest present value?A- 8%B- 10%C- 6%D- 4%(13.) Failure to record an accrued liability causes a company to:A- Overstate assetsB- Understate liabilitiesC- Understate incomeD- Understate owner?s equity(14.) Sales taxes collected by a retailer as reported are:A- Current liabilities B- Current assetsC- RevenuesD- Contingent liabilities(15.) The market interest rate is also referred to as the:A- Start rateB- Contractural rateC- Coupon rateD- Effective rate(16.) On January 1, Multichip Corporation issued $2,000,000, 10-year, 8% bonds at 102. The journal entry to record this transaction would include a:A- Debit to cash $2,000,000.B- Credit to bond payable $2,040,000.C- Debt to discount on bonds payable $40,000.D- Credit to premium on bonds payable $40,000.(17.) A disadvantage of using bonds as a method of long-term financing is that:A- Issuing bonds results in higher earnings per share.B- Interest?s expense is tax deductible.C- Bond holders do not have voting rights.D- Interest must be paid regardless of earnings.(18.) If a corporation issues 5,000 shares of $5 par value common stock for $95,000, the entry would include a credit to:A- Common stock for $70,000.B- Paid-in capital in Excess of Par for $95,000.C- Paid-in Capital in Excess of Par for $70,000.D- Common stock for $95,000.(19.) ABC Corporation purchases 40,000 shares of its own $10 par value, common stock for $25 per share. What will be the effect of stockholders equity?A- Decrease $1,000,000.B- Decrease $400,000.C- Increase $400,000.D- Increase $1,000,000.(20.) If a corporation declares a $1,000,000 cash dividend, the account to be debited on the date of declaration is:A- Paid-in Capital in Excess of Par.B- Common stock.C- Dividends payable.D- Retained Earnings.(21.) An increase in the number of authorized, issues and outstanding shares of stock along with a proportional reduction in the stock in the par value is a:A- Stock dividendB- Stock splitC- Cash dividendD- Deficit(22.) In general, the order of reporting stockholder?s equity on the balance sheet is:A- Preferred stock, Common stock, Paid-in Capital, Retained Earnings, Treasury Stock.B- Common Stock, Preferred Stock, Paid-in Capital, Retained Earnings, Treasury Stock.C- Preferred Stock, Common Stock, Treasury Stock, Paid-in Capital, Retained Earnings.D- Retained Earnings, Preferred Stock, Common Stock, Paid-in Capital, Treasury Stock.(23.) Income tax payable appears on the:A- Statement of stockholder?s equity.B- Tax returns.C- Balance Sheet.D- Income Statement.(24.) Changes in accounting estimates:A- Require prior financial statements to be restated.B- Are not allowed under GAAP.C- Are a prior period adjustment.D- Are reported for the current and future periods on the new basis.(25.) Wildcat corporation reported net income for the current year of $700,000. Wildcat had 5,000 shares of $100 par value, 10% preferred stock outstanding and $40,000 shares of $1 par value common stock outstanding for the entire year. Earnings per share was:A- $16.25B- $17.50C- $18.75D- $16.67(26.) A statement of cash flows:A- May be combined with the balance sheet.B- May be combined with the income statement at the option of management.C- Is a basic financial statement recruited for publicly- held companies.D- Is typically prepared for request of major creditors.(27.) In addition to preparing the income statement, balance sheet, and statement of retained earnings, which of the following is also a required financial statement?A- Statement of Cash flows.B- Cash Reconciliation Statement.C- Statement of cash inflows and outflows.D- Cash Reform Statements.(28.) Cash received from customers would be reported on the statement of cash flows under:A- Investing activities.B- Financing activities.C- Operating Activities.D- Non-cash activities.(29.) The receipt of interest on loans would be reported on a statement of cash flows under:A- Inventory activitiesB- Financing ActivitiesC- Operating ActivitiesD- Non-cash activities(30.) Horizontal analysis is performed on:A- Only the income statement.B- Only the balance sheet.C- Only the statements of retained earnings.D- The income statement, the balance sheet, and the statement of retained earnings.(31.) Tech support corporation reports the following data:Net Sales $275,000Costs of goods sold $175,000Gross profit $100,000In a vertical analysis, the gross profit percentage is closest to:A- 36%B- 63%C- 57%D- 157%(32.) In performing a vertical analysis, the base for interest expense is:A- Net income.B- Net sales.C- Total operating expenses.D- Interest incomes.(33.) Depots Clothing Store had an accounts receivable balance of $420,000 at the beginning of the year and a year ?end balance of $510,000. Net sales of the year totaled $2,100,000. The average collection period for the receivables was:A- 162 daysB- 51 daysC- 41 daysD- 81 days(34.) Thames, Inc?s inventory records for a particular development program shows the following at July 31:Data TableJuly 1 Beginning Inventory ??????.. 4 units @$150 = $60015 Purchases?????????........ 5 units @ 150 = $75026 Purchases???????????.. 9units @ 160 = $1,440Requirements(1.) Compute the costs of goods sold and ending inventory, using each of the following methods:a.) Specific unit costs, with one $150 units and seven $160 units still on hand at the end.b.) Average costc.) Firs-in, First-outd.) Last-in, First-out(2.) Which method produces the highest cost of goods sold?What causes the difference in costs of goods sold?Requirement 1: Compute the costs of goods sold and ending inventory, using each if the following for inventory methods:(a.) Compute ending inventory and costs of goods sold using specific costs method with one $150 units and seven $160 units still on hand at the end.(b.) Compute ending inventory and costs of goods sold using the average costs method. Begin by calculating the average costs per unit. (Round the average costs per unit to the nearest cent).Calculate the ending inventory and costs of goods sold. (Use the average costs per unit to calculate ending inventory and costs of goods sold. Round your final answer to the nearest whole dollar).(c.) Compute ending inventory and costs of goods sold, using the First-in, First-out method.(d.) Compute ending inventory and costs of goods sold using the Last-in, First-out method.Requirement 2. Which method produces the highest costs of goods sold? Which method produces the lowest costs goods sold? Which causes the difference in costs of goods sold?Which method produces the highest costs of goods sold? ?FIFO, LIFO, or Specific Unit Cost? Please choose one.Which method produces the lowest costs of goods sold? ?FIFO, LIFO, or specific Unit Cost? Please choose one.The difference in costs of goods sold under the two methods identified above was caused by: ? the decrease in inventory costs, the increase in inventory costs, or the difference in the number of units sold?, Please choose one.(35.) Little Town?s Pizza- bought a used Toyota delivery van onJan2, 2012 for $18,000. The van was expected to remain in service for four years (39,250 miles). At the end of its useful life, Little Town?s officials estimated that the van?s residual value would be $2,300. The van traveled 13,000 miles the first year, 11,250 miles the second year, 6,000 miles the third year, and 9,000 miles in the fourth year. Requirement 1: Prepare a schedule of depreciation expense per year for the van under the three depreciation methods. (For units-of ?production, and double-declining-balance, round to the nearest two decimals after each step of the calculation. For years with $0 depreciation, make sure to enter ?0? in the appropriate columns).Requirements:(1.) Prepare a schedule of depreciation expense per year for the van under the three depreciation methods.(2.) Which method best tracks the wear and tear on the van?(3.) Which methods would Little Town prefer to use for income tax purposes? Explain in detail why Little Town?s prefers this method?Requirement 2: Which method best tracks the wear and tear on the van?Requirement 3: Which method would Little Town prefer to use for income tax purposes?Explain in detail why Little Town?s prefer this method.(36.) Calculate the present value of the following amounts:(1.) $5,000 at the end of ten years at 8%(2.) $5,000 a year at the end of the next ten years at 8%(Round your answers to the nearest whole dollar)(37.) Assume that Cart Company completed the following note payable transactions.2012Jul1 Purchased delivery truck costing $85,000 by issuing a one-year 8% note payable.Dec 31 Accrued interests on the note payable2013Jul 11 Paid the note payable at maturityRequirement 1. How much interests expense must be accrued at December 31, 2012? (round your answer to the nearest whole dollar).Requirement 2. Determine the amount of Cart?s final payment on July 1, 2013.Requirement 3. How much interest expense will Cart report for 2012 and for 2013? (Round your answer to the nearest whole dollar)(38.) Colonel Sporting Goods is authorized to issue 12,000 shares of common stock. During a two-month period, Colonel completed these stock issuance transactions:Data TableJuly 23 Issued 2,500 shares of $4.00 per common stock for cash of $14.50 per share.July 12 Received inventory valued at $20,000 and equipment?s with market value of $46,000 for 3,500 shares of the $4.00 per common stock.Requirement (1.) Prepare the stockholder?s equity section of Colonel Sporting Good?s balance sheet for the transactions given in this exercise. Retained earnings had a balance of $45,000. Journal entries are not required.Requirement 1. Prepare the stockholder?s equity section of Colonel Sporting Good?s balance sheet for the transactions given in this exercise. Retained earnings has a balance of $45,000. Journal entries are not required. (Enter the accounts in the proper order for the stockholders, equity section of the balance sheet.)Options To select and use on the balance sheet above:? 3,000 shares authorized, 500 shares issued? 12,000 shares authorized, 6000 shares issued? Additional paid-in capital? Common stock, $400 par.? Preferred stock, $7.00, no par.? Retained earnings? Total stockholder?s equity? Treasury stock(39.) Mc-Taggart-Hicks investments specializes in low-risk government bonds.RequirementIdentify each of Mc-Taggart-Hicks transactions as operating (O), investing (I), Financing (F), non-cash investing and financing (NIF), or a transaction that is not reported on the statement of cash flows (N). Indicate whether each increases (+) or decreases (-) cash. The indirect method is used for operating activities.(a.) Sale of long-term investments (b.) Issuance of long-term note payable to borrow cash Increase in prepaid expenses (c.) Payment of cash dividends (d.) Loss of sale of equipment (e.) Decrease in merchandise inventory (f.) Acquisition of equipment by issuance of note payable (g.) Increase in accounts payable (h.) Amortization of intangible assets (i.) Net income (j.) Payment long-term debt (k.) Accrual of salary expense (l.) Cash sale of land (m.) Purchase of long-term investment (n.) Acquisition of building by cash payment (o.) Purchase of treasury stock (p.) Issuance of common stock for cash (q.) Decrease in accrued liabilities (r.) Depreciation of equipment(40.) The financial statement of Homer, Inc. follow:Homer, IncBalance Sheet, (Adapted)December 31, 2012 and 2011(Dollars amounts in millions) 2012 2011 Amount % (Inc/Dec)AssetsCurrent AssetsCash and cash equivalents $398 $310 $88 28.4%Short-term investments 16 42 (26) (61.9)Receivables, net 258 262 (4) (1.5)Inventories 108 82 26 31.7Prepaid expenses and other assets 262 394 (132) (33.5)Total Current assets 1,042 1,090 (48) (4.4)Property, plant, and equipment, net 3,642 3,306 336 10.2Intangible assets 1,100 828 272 32.9Other assets 814 724 90 12.4Total Assets $6,598 $5,948 $650 10.9%Liabilities & stockholder?s EquityCurrent Liabilities 2012 2011 Amount %Accounts Payable $1,326 $1,226 $100 8.2%Income tax payable 30 78 (48) (61.5)Short-term debt 220 218 2 0.9Other 70 72 (2) (2.8)Long-term debt 2,328 1,744 584 33.5Other Liabilities 1,198 1,096 102 9.3Total Liabilities 5,172 4,434 738 16.6Stockholder?s Equity Common Stock 2 2 --- -----Retained Earnings 1,574 1,690 (116) (6.9)Accumulated other comp loss (150) (178) 28 15.7Total stockholder?s equity 1,425 1,514 (88) (5.8)Total liabilities & Stockholder?s $6,598 $5,948 $650 10.9%(Dollar Amounts In Millions) 2012 2011Revenues $9,507 $9,309ExpensesFood & paper (costs of goods sold) 2,200 2,236Payroll & Employee Benefits 2,119 2,181Occupancy & other operating expenses 2,453 2,375General & Administrative Expenses 1,207 1,138Interest Expense 194 133Other Expense (Income), net 11 (36)Income before income taxes 1,323 1,282Income tax expense 273 269Net income $1,050 $1,013Compute these profitability measures, for 2012. Show each computation:(a.) Rate of return on sales(b.) Asset turnover(c.) Rate of return on total assets(d.) Leverage (equity multiplier0 ratios(e.) Rate of return of common stockholder r?s equity(f.) Is Homer, Inc?s profitability strong, medium or weak.

Paper#40327 | Written in 18-Jul-2015

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